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What does history tell us about the stock market and presidential elections? · The Financial Exchange Show

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Veterans Development Corporation. This is the Financial Exchange with Mike
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Armstrong and Paul Lane.
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Speaker 2: Good morning, and welcome to the Financial Exchange. It's a Tuesday,
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ahead of an inflation Wednesday, we get a reading on
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the consumer price index tomorrow, followed by initial jobless claims
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and the producer price index on Thursday. Is there are
1:28
a couple of companies reporting earnings this week, but nothing
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all that significant. And then of course we have the
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are we calling this the second presidential debates tonight?
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Speaker 3: Sure?
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Speaker 2: Different people, but yeah, nonetheless second presidential debate going on
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this evening. So we'll be talking about what we here
1:45
at the Financial Exchange will be listening to when it
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comes to that. But first, I would argue maybe the
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most overstated title of an article so far this year,
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we've got the vibe session ending as the US economy
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nails soft landing. Economists say, I don't know about you, Paul,
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but I have I guess the only economists that I
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can point to that has said we are nailing the
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soft landing would be Janet Yellen, whose job it is
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to talk about the positivity of the US economy because
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she works for the Biden administration at this point. But nonetheless,
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we're gonna dive in right there to discuss and debate
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whether or not we are nailing the soft landing right now. So,
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first of all, let's define the soft landing, and there
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is no definition because it is not an actual economic term.
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Speaker 3: It's not a recession. There is no exact definition.
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Speaker 2: Even if we're a recession, there's no exact economic definition
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of a recession either. We just rely on this group
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in Cambridge, Massachusetts to determine whether or not we have one.
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But we, Chuck and I generally defined a soft landing
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as getting through twenty twenty four with both unemployment and
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inflation remaining below four and a half percent. So by
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that definition, we are in soft landing territory, but we
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haven't landed the plane. Would be my takeaway here right now.
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We've got the overall US unemployment rate sitting at four
3:20
point two percent, has been as high as four point
3:24
three percent, and we've got year over year inflation numbers
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that that sorry, I have two and a.
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Speaker 4: Half persion on the core PC data as through July, which.
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Speaker 2: Is what the FED looks at when they talk about
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you know, overall inflation. So yeah, core PCE two point
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six percent as of the month of July two five.
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If you look at the overall number and any of
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the averages you look at over the last six months
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three months are all trending in that direction. So to
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define it, I do think we are in soft landing territory,
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But to say that we have landed that plane I
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think is a bit too early at this stage. And
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the jobs report last Frida it didn't exactly help make
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that any clearer.
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Speaker 4: Yeah, I know that you and Chuck were particularly negative
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on the job support and one of the things that
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I couldn't help thinking about, though, Mike, is we've seen
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significant revisions to those jobs report over the course of
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the last six to eight months. Negatively to be fair,
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but with the number that we saw, the unemployment number
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that came in in terms of the percentage right in
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line with what we anticipated, but the jobs added were
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weaker than anticipated, and I just wonder if we shouldn't
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overreact to that number just because of the sampling errors.
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And to be clear, I guess it could go worse
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than anticipated there. That's one of the pieces that I
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picked on Alright. I differ a little bit that I
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feel like, I don't want to speak for Chuck fully,
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he was kind of very he was quite negative on
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the report. And I'm just not sure if I'm there yet.
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If this is full proof that we are headed in
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that direction, I'm not soft landing, but I'm not recessionary either.
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Speaker 3: Yeah.
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Speaker 2: So I don't think that this Job's report, this Job's report,
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in my opinion, did not tell us that we are
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in recession. Yeah, And in fact, it could have pointed
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much clearer, much more clearly in that direction. I had
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the unemployment rate ticked up with the other factors that
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we had come in. If I want to cherry pick
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some very good data points from that Job's report, you
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had them. You had the unemployment rate flatline, basically didn't move.
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It came down very slightly to four point two percent.
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Wage growth also pretty solid in this report. I don't
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know what to make of that. We're going to cover
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another story later about a major US employer still talking
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about raising wages right now because they can't attract people
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into certain jobs. And so if I cherry pick those
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two data points, are they supportive of a soft landing argument?
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Speaker 3: Absolutely.
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Speaker 2: The concern that I have is to your point, We've
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gotten a lot of revisions over the last several months,
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and I think that played a key role in the
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negativity here is you know, you revised down job creation
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estimates by eighty seven thousand. That was a big move
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over a two month time period. And generally speaking, when
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you start getting revisions to big revisions to jobs reports,
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historically they don't tend to suddenly go, oh, and now
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we're revising jobs upwards by hundreds of thousands. Like those
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trends oftentimes continue in one direction if they are significant,
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and I think that would be the fear is, Hey,
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we've had the number of jobs created slowly come down,
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We've had the unemployment rates slowly creep up. Any revisions
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that we've received over the last three months have been
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towards fewer jobs created. And so again, was this Job's
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report from last Friday catastrophe by no stretch. In fact,
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it kicked out the argument of what the actual state
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of the economy is and whether or not we're going
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into recession by another month or two.
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Speaker 3: But it also, you know, that jobs report also had.
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Speaker 2: The ability to kind of save the narrative of oh, now, no,
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we are nailing this off landing now it definitively did
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not do that. Sure, it definitely did not accomplish that,
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And I think, in my mind, the biggest concern really
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came from the revisions to the last two months that
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along with the previous year revisions paint and economy that
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is far less robust on the labor market side than
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we previously understood.
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Speaker 4: Yes, if you want to argue soft landing, your focus
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will be inflation the year over year number two and
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a half percent, that's phenomenal progress that we've seen there.
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And consumer spending. I think those are going to be
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your two pillars that you're really going to lean on heavily.
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If I wanted to say, Mike, you know you're off
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your rocker. We're in a really good spot. And I'm
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not saying that, but just to make that counterpoint, those
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are the two things that you're going to ly on.
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The consumer spent up one percent month of a month.
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Consumer spending was up for the month of July, a
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really good number posted there. It seems as if that
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has been the recurring theme really over the last two years,
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is a very resilient consumer. During this period of time
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of high inflation, inflation has come down that has continued
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to hold up. Okay, the consumer spending and like I said,
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inflation's under a good standpoint. However, like you said, the
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counterpoint to that soft landing idea is the labor market.
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It's got to be all in and around the labor market.
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If you want to point to recession, that's what you're
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keying in on in terms of slow down in economic progress.
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So those are really the two forces that we have
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pinning against each other as we look to see if
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we've nailed that soft landing.
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Speaker 2: One last piece that does matter, and I just I
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don't know how much it matters because it's been so
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broken over the last few years. But we've talked about
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and in fact we're kind of a clip of our
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show is picked up and somewhat teased by a national
8:32
financial podcast about the Vibe Session, and the story of
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the Vibe Session has been that, in spite of really
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solid economic growth data out there and really low unemployment
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and wage gains that outpaced inflation for the last year
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or so, when you ask people how they're feeling about
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the economy at least in twenty twenty two and twenty twenty.
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Speaker 3: Three, it's terrible.
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Speaker 2: Yeah, it was worse readings than we saw in the
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depth of the two thousand and eight financial crisis, and
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I said, what the hell is wrong with people? I
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know that prices are through the roof, but at least
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you got a job. And so I looked at those
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and couldn't really I couldn't really put them together other
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than to say, people really hate prices moving up this substantially,
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and we haven't had to deal with that since the
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nineteen seventies.
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Speaker 3: That was the only real explanation I could come up with.
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Speaker 2: Today, the way the economy is going and what people
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are saying about the way the economy is going are
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much closer together. It's not that the vibes the sentiment
9:32
has dramatically improved. It has improved somewhat. It's just that
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those expectations around things like where inflation is going to
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be and how people feel about the state of the
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economy and whether or not it is going to improve,
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in my mind at least, have lined up a little
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bit better now with the actual facts on the ground.
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Speaker 4: I would agree. It seems like it's been late to
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the party that the overall sentiment has come into more
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positive territory. And what's funny is it might be so late, Mike,
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that we could see sentiment improving as the economy decelerates
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an almost criss crossing paths right different direction.
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Speaker 3: Yeah, let's be clear about this.
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Speaker 2: There is no good study showing out there that how
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people feel about the economy has anything to.
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Speaker 3: Do with how it's actually doing.
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Speaker 2: And in fact, the average person and consumers are notoriously
10:20
bad about spotting recessions, and you'll see things like consumer
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spending and retail investments in the stock market, you know,
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pile in at the worst possible second historically speaking. So
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I would not use anything about that as a forward
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looking indicator, but rather just you know, improvement and sentiment.
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Can they have other implications like what happens in elections?
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Speaker 4: And no interesting on inflation. There is some credence to
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the idea that consumers sent to a kind of an impact,
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but we're kind of past the inflation talk right now.
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It's all about the labor market and the R word recession.
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That's what the focus is.
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Speaker 1: Now.
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Speaker 2: Let's take a quick break. When we come back, we
10:57
have the debate tonight. Let's let's dig in there. There's
11:00
a story from Bloomberg here, I believe Yeah Bloomberg that
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equity traders are bracing for this pivotal Trump Harris debate
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will dig in there next on the Financial Exchange.
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Speaker 2: Edgy traders brace for potentially pivotal Trump Harris debate. So
12:19
let me be clear about something. I do think this
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debate is pivotal. I just don't think it matters one bit.
12:25
Or maybe it does matter for equity markets, but it's
12:27
unclear how it matters and why it matters and which
12:30
direction it will drive stocks.
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Speaker 3: Let me let me start there. Is it pivotal? Yeah?
12:35
Speaker 2: I mean the last one certainly was, So I'm not
12:37
going to I'm not going to look at this one
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and say that, oh, nobody's gonna watch or pay attention.
12:41
Like absolutely, this debate is pivotal. It will matter. It's
12:45
the first time Harris has really given anything truly dramatically unscripted,
12:51
and so you know it's going to be pivotal. I
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think for some portion of Americans who haven't fully made
12:57
up their mind yet of who they're going to vote for,
12:59
or frankly, whether or not they are even going to
13:01
cast a vote for either of these two candidates, that's
13:03
where I mean, frankly, that's where I think the difference is.
13:06
It's not oh yeah, this debate's going to make me
13:09
switch who I'm going to vote for. It's hey, do
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either of these people inspire me enough to even want
13:14
to show up to the poll in maybe seven states?
13:17
Speaker 1: Right?
13:18
Speaker 3: That's what we're talking about really matters here.
13:20
Speaker 2: But you know, let's talk about actually first things first,
13:24
before we get into different policies of the two. I
13:27
want to talk about markets, and you know generally how
13:31
they perform. First things first, markets during election years, you know,
13:35
going back through modern history, don't perform much better or
13:38
worse than non election years. So could there be more
13:41
volatilities surrounding the election, especially given this year, given the
13:45
craziness of this election cycle. Sure would I try and
13:49
stack up some bets based on where I think the
13:51
debate performance is going to go?
13:53
Speaker 3: Like I don't.
13:54
Speaker 2: We wouldn't even know where to start, and I don't
13:55
think anyone else would either. The other piece that I
13:58
just found interesting, the Wall Street Journal put together their
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own piece on this, and you know, brought up some
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research by ned Davis Research examining data going back over
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one hundred years, so March thirtieth of nineteen oh one
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through January thirty first of twenty twenty four, What they
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found was that the Dow Jones Industrial Average has risen
14:17
at an annualized rate of eight point two percent under
14:19
Democratic presidents from the date of their inauguration, and at
14:24
an annualized rate of three point two percent under Republican administrations.
14:28
Now I had to hit pause there for a moment,
14:30
because that was not generally my understanding of how markets
14:34
performed over large periods of time. So a few things
14:37
about this. One they're talking about the Dow, which is,
14:40
as we've talked about, not a perfect index for looking
14:43
at how the overall US markets performed. But another few
14:46
pieces here. One, the Republican and Democrat parties going back
14:51
to the early nineteen hundreds don't look a whole lot
14:54
like they do today, So important distinction there.
14:57
Speaker 3: Two.
14:59
Speaker 2: I would be very interested in rerunning this data if
15:01
you were willing to take out Herbert Hoover's run in office,
15:05
because he oversaw.
15:06
Speaker 3: Nineteen twenty nine to nineteen thirty three in.
15:08
Speaker 2: Terms of the stock market, and if you recall some
15:11
not great stuff happened in the Great Depression in terms
15:13
of stock market performance, so I'm not sure that that
15:15
would be all that unique. And then you know, also
15:18
you have to acknowledge here that you had George Bush
15:21
overseeing George W. Bush overseeing one of the worst periods
15:24
of stock market performance in history two thousand and one
15:27
through two thousand and eight. Obama took office on January twenty,
15:32
two thousand and nine, so like just about when the
15:35
markets had already bottomed. So I would also say this
15:39
is completely useless. The whether the Democrat or Republican is
15:44
in office is not driving the stock market returns in
15:48
one direction or another. They just happened to be coinciding
15:51
with overseeing business cycles. Are there things that happen around
15:53
the edges?
15:54
Speaker 3: Sure?
15:55
Speaker 2: Is it going to drive market performance in one direction
15:58
another based on if we have a Democrat or Republican
16:01
in office?
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Speaker 3: I seriously doubt it. No.
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Speaker 4: I always bring up the point with clients, particularly around
16:05
the election cycle, that Bill Clinton is not responsible for
16:08
the emergence of the dot com boom and the Internet
16:11
frenzy in the late nineties.
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Speaker 3: Nor is George W.
16:14
Speaker 4: Buss fully responsible for everything that went on from two
16:17
thousand and one, which were kind of the unwinding of
16:20
all that enthusiasm or you know two thousand and eight.
16:23
Economies move in cycles and there are much major factors
16:26
in play, and it frustrates me. I'll go even further
16:28
to your point that the debate to me is there's
16:31
two different hats that you can wear. The political hat, Yeah,
16:34
it's absolutely pivotal for the political discourse and for the election.
16:38
What happens in this debate tonight, However, the economic hat,
16:41
to me, it's almost inconsequential for the immediate reaction of markets.
16:45
If you look back to the previous one, which was
16:47
a very significant debate, I mean, how much more activity
16:51
can you have half of a debate than we saw.
16:54
And if you look at the whether it's the VICS,
16:56
which is a fear gauge volatility measure trying to gauge
16:59
how much equity markets are moving at that time, it
17:02
was extremely low. And if you look at interest rates,
17:05
they did not deviate significantly at least the night after
17:09
the debate from the first one that occurred on July
17:12
twenty seven. So I just push back on that notion
17:14
that markets are going to have some wild reaction tomorrow.
17:17
That's not what they're going to move based.
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Speaker 3: On so other interesting stuff.
17:21
Speaker 2: You know, looking at data from nineteen seventy two on
17:24
under Democrat administrations, information technology industrials have had the best
17:28
track record outperforming other sectors. Under Republican administrations, healthcare has
17:34
had the best record, while industrials have had the worst. Again,
17:39
let's say that you could use like I'd be more
17:42
inclined to believe at least with you know, I think
17:45
the politics have changed quite a bit with the implementation
17:48
of tariffs and just ad very different focus of Republican
17:51
versus Democrat administrations these days. But let's say you even
17:55
wanted to use this information, and let's assume that it
17:57
continues to be true for a moment here. So to
18:00
place a bet that's going to be successful, one, you
18:03
have to know who's going to win the White House.
18:05
Then you have to know who's going to win the
18:06
House and the Senate. You have to know if they're
18:08
going to have a super majority to be able to
18:10
pass the bills that they want to and then you
18:12
have to know that they're actually going to behave like
18:14
previous administrations. To give you the leg up on oh yeah,
18:17
this sector is going to outperform the other ones. I
18:20
would point towards the Biden administration. We've talked about this before.
18:23
The Biden campaign when they ran four years ago. In
18:27
my mind, biggest thing that stuck to me was this president,
18:30
if he gets in, is going to pass a lot
18:33
of positive policy for renewable energy.
18:37
Speaker 3: That was kind of my takeaways. He wanted to make
18:39
those campaign pledges.
18:40
Speaker 2: He's going to shut down drilling, He's going to pass
18:42
subsidies for evs and batteries and solar and all sorts
18:45
of stuff.
18:46
Speaker 3: Then he did.
18:48
Speaker 2: Biden passed the Inflation Production Act, biggest subsidy for renewable
18:51
energy that we have ever seen in our nation's history.
18:54
Go take a look at how those companies that sector
18:56
has performed under the Biden administration.
18:58
Speaker 3: Give it a quick.
18:59
Speaker 2: Comparison to the traditional oil and gas sector. For example,
19:02
how many people were placing bets saying, oh, yeah, Biden
19:04
gets in, I'm going deep on you know, big oil
19:08
companies right like that would not have been the bet,
19:10
But had you done it, you probably would have turned
19:12
out a hell of a lot better than had you
19:14
gone and invest in a bunch of solar companies. So
19:17
my takeaway here is presidential politics are important, they matter
19:21
to everyone, But trying to figure out how the markets
19:24
are going to react to them. Good luck, good luck,
19:27
put it away, quick break. Wall Street watches next.
19:30
Speaker 1: To Like us on Facebook and follow us on Twitter
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at TFE show. Breaking business news is always first right
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here on the Financial Exchange Radio Network. Time now for
19:54
Wall Street. Watch a complete look at what's moving markets
19:57
so far today right here on the financi You'll Exchange
20:00
radio network.
20:02
Speaker 5: Well after yesterday's rebound, markets today are in mixed territory.
20:05
Is Wall Street readies for tomorrow Morning's the latest gauge
20:08
on inflation when the Consumer Price Index is released. Right now,
20:13
the Dow is down by two hundred and forty four points,
20:16
or six tenths of a percent, SMP five hundred is
20:19
up by only one point, and the Nasdaq is up
20:22
by about a third of a percent, or fifty four points.
20:25
Russell two thousand is down by two thirds of a percent,
20:28
Ten year treasureeled down by one basis point at three
20:31
point six eight percent, and crude oiled down over three
20:35
and a half percent, now trading just above sixty six
20:38
dollars A barrel big news out of Southwest Airlines this morning,
20:43
where executive chairman and former CEO Gary Kelly announced he
20:46
will retire next year, amid other shakeups to its board.
20:50
The airline continues to face pressure for changes by activist
20:53
investor Elliott Investment. Shares in Southwest are currently down by
20:58
four percent. Meanwhile, share an Oracle are up by thirteen
21:01
percent after the cloud software company be quarterly expectations, where
21:06
it's partnership with Nvidia boosted revenue. Furthermore, Oracle agreed to
21:10
a new deal with Amazon Web Services after unveiling its
21:15
new line of iPhones yesterday. Apple shares are down by
21:18
about half a percent. Aside from its product event, the
21:22
European Union's top court upheld in order, allowing Ireland to
21:26
recoup more than fourteen billion dollars plus interest in taxes
21:30
from Apple elsewhere under Armour cut it's annual outlook, citing
21:34
higher restructuring costs as it closes a distribution facility and
21:38
lays off employees. That stock down by seven percent. And
21:42
after today's closing bell, we'll see earnings from Petco, Game
21:45
Stop and Dave and Busters. I'm Tucker Silvan. That's Wall Street.
21:49
Speaker 3: Watch, Paul.
21:50
Speaker 2: We're gonna talk about something that we don't frequently go
21:53
into and review because they become almost taboo in a
21:57
lot of places and I think for good reason, they
22:00
have become taboo and difficult to get. But it's reverse mortgages,
22:03
so you've probably heard advertisements all over for them at
22:07
some point or another. I know I've seen TV ads
22:10
for them. But when I kind of think about the
22:13
reverse mortgage space, I kind of look at it now.
22:16
I do look at it as last resort. And there's
22:19
a piece here from I believe it's Barons today talking
22:22
about how it may be the best way to go
22:24
for retirees who are short on cash, and it basically
22:27
outlines how they work. And I would say that that
22:32
I think is the area that I would agree with,
22:35
is it could be the best way to go for
22:39
specific group of retirees, those who are short on cash,
22:43
and really those only it's important to really understand how
22:49
these things work. And so the outline a few cases here.
22:53
There's two basic types of reverse mortgages. There's your lump
22:56
sum reverse mortgage, where you borrow with some that's been
22:59
the kind of traditional way of doing it, where you
23:01
you borrow a big sum of money, you never have
23:03
to pay it back the sum of money instead of
23:07
you making interest payments, it just grows. Because there's a
23:09
built in interest rate, and so you get a statement
23:12
regularly that says, oh, yeah, the three hundred thousand dollars
23:15
that you borrowed is now three hundred and seventy thousand
23:17
dollars because it fees and interest. And so if you
23:22
sell your home then you know they're going to first
23:25
recoup this reverse mortgage. Or if you pass away in
23:27
your home, your your beneficiaries, your kids will have to
23:30
sort out Okay, you know, is the home above water
23:33
or underwater with this reverse mortgage? Can we pay it
23:36
back if we sell the property, or do we just
23:38
you know, relinquish control of the home.
23:40
Speaker 3: To the bank.
23:41
Speaker 2: There's also then your line of credit reverse mortgage, which
23:44
does operate a little bit differently but effectively. Think of
23:47
it as a helock where you're not making payments on it,
23:50
it's just accumulating over time, and there you're susceptible to
23:54
moves and interest rates, just like you would be on
23:56
a home equity line of credit. I'm not going to
23:58
say these things don't have their place, because clearly, you know,
24:03
there are circumstances where they make sense. But as I
24:05
mentioned before, my concern is I think that they probably
24:08
get pushed a little bit too much. And I know
24:11
back in the day, for instance, people were pushing them
24:13
and saying, hey, you know, you've got all this equity
24:15
in your home, you should take it out and go,
24:17
you know, do this awesome investment because look how much
24:20
it's going to return. And gosh, that's where things get
24:23
really really hairy, really really fast.
24:25
Speaker 3: That in my mind, is akin to gambling.
24:27
Speaker 4: Oh yeah, I mean to me, Mike, the thing that
24:30
just continues to rattle around my head when we talk
24:32
about the subject of reverse mortgage is what you said earlier,
24:35
it's it's last resort. Those are the two words that
24:37
I think about the most. Is that this is something
24:39
that you tap when you've depleted basically all of your
24:42
financial resources. That to me, that's really the only place
24:46
that I see for it. You know, they mentioned some
24:49
other instances in here, but I just would be really
24:52
wary of utilizing for anything else other than that, just
24:56
because the roof over your head is one of the
25:00
most important things other than your health that you need
25:03
to get by. So it's just something that you have
25:05
to proceed with tremendous amounts of caution.
25:08
Speaker 3: Yeah.
25:08
Speaker 2: The difficult part too, though, is you know, In addition
25:11
to being eligible, you have to be over a certain
25:13
age requirement and things along those lines. Obviously, you have
25:15
to be of sound mind to be able to do
25:18
a reverse mortgage, right if you're cognitively declining, you have
25:21
to take a class on this type of thing. You
25:23
cannot just do it, and so that's important. But also
25:26
you have to prove that you have the ability to
25:28
pay taxes and insurance on your home right. And so
25:30
if you spend all of your other financial assets and
25:32
don't have the ability to do that, then that gets
25:34
called into question two. So it's not exactly something that
25:38
can be put off forever. But also, like I said,
25:41
kind of in my mind, is looked at as a
25:44
last resort. The other piece that I didn't really know
25:47
that they gave out an example here of I don't
25:50
know where this woman lived, but you know she was
25:53
evaluating the reverse mortgage and went through the whole pros
25:58
the process. The cost of setting up the line of
26:01
credit alone came to twenty five thousand dollars. That was
26:06
the beginning balance on her home equity line. That had
26:08
nothing to do with her actually using the money. That
26:10
was twenty five thousand dollars just in setup costs on
26:13
this type of loan, So the costs are very much real,
26:17
and I guess I would just point out that, yeah,
26:19
there are circumstances where it can be the way to go,
26:23
but it requires a lot of planning if you're going
26:25
to go in that direction and proceed with.
26:27
Speaker 3: Caution, folks.
26:29
Speaker 2: I want to talk to you about exciting development on
26:31
the Financial Exchange, something new that we haven't done I
26:34
think in over a year, Tucker, maybe two.
26:37
Speaker 3: I think it was two.
26:37
Speaker 2: Yeah, it's been quite some time. But we're hosting two
26:41
live broadcasts of this show the Financial Exchange here in Massachusetts.
26:46
We're doing one at the MGM Springfield and then we're
26:50
doing another one at the brand new Margueritaville Hotel and
26:53
Resort on Hyanas. So I want to get you the
26:55
dates of these and give you the means of signing up.
26:58
But again, two live podcast of the show. Will then
27:01
be doing an educational seminar after the fact with the
27:04
Armstrong Advisory Group. But the first one is being held
27:07
on Tuesday, October eighth. That's that the MGM Springfield. Second
27:11
one Margueritaville Hotel and Resort in Hyaennas on October twenty fourth.
27:16
You can come in person check out the show, see
27:18
how we do it. Tucker, will you be there or
27:20
you can be here?
27:21
Speaker 5: Most likely here, but I think Ben's going to be there, Okay,
27:24
so you know.
27:25
Speaker 2: Chuck and I will be there. Tucker may or may
27:27
not be there. He reserves the right to be there.
27:29
Speaker 4: But some's got to run the ship. Here, I think's
27:32
be wasting away, and Margerita that seems much more likely.
27:36
Speaker 2: Ed Lampert is going to be joining us down on
27:38
the Cape after the fact, So you get to meet
27:41
Ed if you'd like to as well. We'll be discussing
27:43
the upcoming presidential election, you know, economic policies that we
27:47
should have a better read of by that point in
27:49
time in terms of what they are planning to propose,
27:52
and then you know just generally how the economic landscape
27:55
changes during presidential election years and after elections. If you
27:59
want to sign up for the events again October eighth
28:01
and October twenty fourth, you can get more information two ways.
28:05
One you can call us by calling eight hundred three
28:08
nine three four zero zero one. The second way is
28:11
please just go to our website and sign up.
28:13
Speaker 3: You can go to.
28:13
Speaker 2: Armstrong Advisory dot Com slash Events. Fill out the form
28:18
associated with the event if you'd like to attend again.
28:20
That's Armstrong Advisory dot Com Slash Events. For the events
28:23
on October eighth and October twenty fourth, live broadcast of
28:26
the show and then a seminar after with the Armstrong
28:30
Advisory Group eight hundred three nine three four zero zero
28:33
one or Armstrong Advisory dot Com Slash Events.
28:36
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
28:38
registered investment advisor. Nothing in the ad or in any
28:41
Armstrong guide a specific financial, legal or tax advice. Consult
28:44
your own financial, tax into state planning advisors before making
28:47
any investment decisions. Armstrong make contact you to offer investment
28:50
advisory services.
28:52
Speaker 2: Speaking of you know, we've been talking earlier about the
28:56
state of the labor market, and again a lot of
28:59
things point out towards a loosening labor market. But then
29:02
you get stories like this next one where just kind
29:04
of runs in the face of what you had been anticipating.
29:06
So Bank of America says they're gonna be raising their
29:08
minimum hourly pay to twenty four dollars per hour. As
29:12
tellers continue to flee the industry. It's not a huge
29:15
increase for them. They're currently at twenty three dollars an hour,
29:18
and they're gonna.
29:19
Speaker 3: Be bumping it up.
29:20
Speaker 2: But they, you know, they do have two hundred and
29:21
twelve thousand employees across the country. A lot of them
29:25
do work in these branches, and this will be, you know,
29:27
another bump in pay for this position. I can imagine
29:31
why it's difficult to hire for you know, it's a
29:33
skill set that is not dissimilar to other low paying
29:39
type jobs, whether it's a you know, somebody working checkout,
29:42
for instance, but requires a whole lot more in the
29:45
way of background check.
29:47
Speaker 3: I would imagine all sorts of requirements to.
29:49
Speaker 2: Be handling money at a bank that don't exist if
29:52
you want to say, you know, run checkout at a
29:55
grocery store, for example. And so that's a big, big increase.
29:59
But again, and I just find it. I find it
30:02
contrary to what we're hearing elsewhere about the labor market,
30:05
where companies are saying, hey, we're pulling back on hiring,
30:07
We're not looking to do this, and Back of America
30:09
is saying, now we can barely retain employees. We have
30:11
to start bumping this up. That same job was only
30:14
paying fifteen bucks an hour back in twenty nineteen.
30:17
Speaker 4: Yeah, that's what blew me away. The most mic is
30:19
over a five year period, you've seen that increase from
30:21
fifteen dollars an hour to twenty five. Now, of course
30:24
there's been a lot of inflation that's come with that
30:26
time period as well, but overall, if you just look
30:28
at wage growth throughout the country, it obviously peaked around
30:32
twenty twenty two when inflation was at its highest, around
30:36
six or seven percent. That's the three month moving average
30:39
of wage growth that I'm quoting there. It's you know,
30:41
come down significantly since then. To be clear, though that
30:44
was a real high high that had been set in
30:47
twenty two. It now hovers around about four and a
30:49
half percent plus in terms of what we're seeing overall
30:52
from the economy in terms of wage growth, so not
30:55
at it's peak, but in some sectors it appears still
30:58
seeing some upticks. Based on Deman, I just can't imagine
31:01
that bank branches will continue to expand. It seems like
31:05
our generation has less and less reliance for those. I'm
31:09
not saying you don't need them at all, but I
31:12
just When I read the starticle, I'm like, you know,
31:14
how many tellers do you really need in terms of
31:16
physical locations?
31:17
Speaker 2: Yeah, you know, I'm not sure, but both Banked America
31:20
and Chase have made branches and strategic locations a key
31:24
plan for their expansion of.
31:26
Speaker 3: The last few years.
31:27
Speaker 2: And again I'm interested because I'm right, I don't need
31:30
to go to a branch. But here's the question that
31:33
I have. Would you go open a new checking account,
31:37
specifically like accounts that you are going to pay all
31:39
of your bills with and use as a primary checking
31:41
account if the bank had no branch in your area?
31:45
Speaker 3: Is probably not.
31:46
Speaker 4: No, you would not.
31:46
Speaker 3: Yeah.
31:48
Speaker 2: And so I've got a colleague that banked the Wells
31:51
Fargo because they were in their area down in Connecticut,
31:53
and same story. He had to do something with a
31:56
bank branch because there's no other way to get it
31:58
done for something. What it was, Yeah, the driver's rear
32:02
end down to New York City to get this thing done. So, yeah,
32:07
the branch is less and less important, but it is
32:10
I think a prerequisite to get a.
32:13
Speaker 4: Cast establishing relationship.
32:14
Speaker 2: Yeah, quick break, but a lot more to cover in
32:17
the next time of the financial Exchange big event from
32:19
Apple unveiling their new products for the year here at
32:22
their fall event. Will be covering that, as well as
32:24
some new fines against big US tech companies across the
32:27
European Union.
32:28
Speaker 3: That's next on the Financial Exchange.
32:30
Speaker 1: Business and financial news affecting the markets and your wallet.
32:34
We've got it all straight from Wall Street right here
32:37
on the Financial Exchange Radio Network. The Financial Exchange streams
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32:45
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32:52
Speaker 5: The Financial Exchange has built an incredible partnership with the
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33:31
Speaker 2: Apple came out yesterday and introduced the latest version of
33:34
their flagship device, the iPhone sixteen, and big focus on
33:40
artificial intelligence. There now important caveats here. While the device
33:45
is being quote built for AI from the ground up,
33:50
there won't really be any artificial intelligence on device capabilities
33:53
at rollout. Instead, it's going to be taking place via
33:56
software rollouts over the next few years as they put
33:59
these things on the device in the software integrated there.
34:04
And look, I can get the appeal of having on
34:07
device artificial intelligence where you're not going to open AI
34:11
and you know, putting in something with you know who
34:14
knows how that information is being used. There's some privacy
34:17
benefit here. But this is one of a few steps
34:21
over the last few years that I'm kind of just
34:24
questioning why Apple's doing of rolling out a product that's
34:31
seemingly not usable in the same way that many of
34:35
their other devices are. Right Like, when I look at
34:37
the biggest successes of Apple, the iPhone, air pods, the
34:43
Apple Watch, all of these were existing products that had
34:48
done quite well over time. Heck you go back for
34:51
the iPod, these were products. The MP three player had
34:54
been out for years. When the iPod came out, we'd
34:57
all been using blackberries and other smartphones for years before
34:59
the iPhone came out. We had all used headphones in
35:02
one way or another, even wireless ones for quite some
35:05
time before they roll out the iPods, and Samsung and
35:08
many others beat out, you know, Apple to the first
35:10
in market with the Apple Watch by quite a bit.
35:14
There's almost no one. I mean, Google has implemented some
35:17
AI features, but there's almost nobody out there that is
35:20
pushing AI in the way that Apple is now doing.
35:25
There is nobody that has successfully rolled out a usable
35:29
VR headset in the way that Apple is now trying
35:32
to push. And I'm just curious, you know. One, I'm
35:36
curious if they'll be able to execute it on the
35:38
execute on it in the same way. And two I'm curious.
35:41
I don't know if I said A or one there,
35:43
but in either case two slash B. I wonder why,
35:49
you know, is there a distinct reason here where they're
35:51
learning that. Hey, you know, we used to be able
35:53
to just rip off a whole bunch of what am
35:57
I thinking of patents and them into our devices and
36:01
we were fine, and hey, ever since we lost that
36:03
case against the company that invented the O two sensor.
36:06
Speaker 3: In our watch. Maybe we do feel like we need
36:08
to be first to market here.
36:10
Speaker 4: Yeah, it's an interesting point where they find themselves at.
36:13
Thinking back over their history, Mike, the successes that they've had,
36:16
there's been a really simplified delivery in terms of what
36:19
the message was. The iPod, for example, you know, a
36:21
thousand songs in your pocket that was ahead of anyone
36:25
else in the space at that time. To be able
36:27
to store that much audio on there. The phone has
36:29
basically become a computer in your pocket, right that we
36:32
rely on so heavily, and they do it the best
36:35
in that space too. The watch similarly, I think you
36:38
could say that in terms of a digital watch, they're
36:39
probably the number one player in the space. When you
36:41
look at the innovation with AI. Can they be the
36:44
best player in the space. Can they use it most
36:46
efficiently efficiently to impact their consumers to benefit them That
36:51
remains to be seen. It seems like here they're sort
36:53
of grasping at straws in terms of what the impact
36:56
will look like. It's going to take some time before
36:58
it rolls out, so I don't know, and it's pointing
37:00
out here that this makes you sell more phones on
37:03
September twentieth, because they're only going to come out through
37:06
software updates, these AI features, and it's sort of unclear
37:10
as to how much benefit people will receive from those.
37:14
Summary of messages has been mentioned out emojis sort of
37:18
these minor pieces.
37:20
Speaker 3: Yeah, yeah, I'm just I mean, there's clearly there's gonna be.
37:25
Speaker 2: Somebody out there who wants the brand new phone and
37:27
sees the real benefit of on device artificial intelligence. Some
37:31
super user out there is going to love it, and
37:34
the proof will be out there, right Like if people
37:36
start posting tiktoks and YouTube videos of really cool stuff
37:40
that the iPhone can do that no other device can,
37:42
then sure, I'm sure it will sell. But again, another
37:47
feature of Apple devices has been a status symbol.
37:49
Speaker 3: You know, how do I stand out? Well, I've got
37:51
the you know.
37:52
Speaker 2: I've got the white in your earbuds, and that's clearly
37:57
an Apple device.
38:00
Speaker 3: I can't really do that with AI. Yeah, there's just
38:03
no means in which to do so.
38:04
Speaker 2: And so I'll be interested to see where this goes
38:07
or if it's a misstep by Apple.
38:09
Speaker 3: Let's take a quick break.
38:10
Speaker 2: But a lot more to cover on the second hour,
38:13
including a big case against Google into Apple, and then
38:16
a little bit of more FED talk. We've got the
38:18
meeting coming up next week I wanted to discuss. I
38:20
wanted to discuss this piece as well. Quick break and
38:22
full market coverage next on the Financial Exchange.